I am directed to say that doubts have been raised regarding the mode of
valuation to be adopted in respect of goods notified under section 4A of the
Central Excise Act, 1944, which are partly sold with the retail price printed on
the packages and partly sold without printing the retail prices on the other
packages. It has been reported that problems are being faced in respect of
virtually all the commodities notified under Section 4A; e.g. lubricants, toilet
soaps, paints and varnishes, automobile bulbs, baby powder, duplicating stencil
paper, adhesive tapes, cameras, batteries, aerated water, pressure cooker,
instant coffee, unrecorded audio/video cassettes, shampoo, ceramic glazed tiles,
other edible preparations etc. Some of the situations, where MRP cannot be
printed on the notified item, as brought out by the Commissioners, are mentioned
below:

2.
The matter has been examined. Sec.4A of the Central Excise Act, 1944 is
applicable in respect of those cases only where the manufacturer is legally
obliged to print the MRP on the packages of the goods, under the provisions
of the Standards of Weights and Measures Act, 1976 or the rules made there under
or any other law for the time being in force.

3.
In respect of telephones falling under heading 85.17 and notified u/s 4A
it was noticed that the manufacturers also make bulk supplies of telephone
instruments to the Deptt. of Telecommunication (DOT) and the MTNL, who in turn
provide these instruments, on rental basis, to the telephone subscribers. The
ownership of the telephone instruments remains with the telephone Deptt. and
there is, therefore, no retail sale involved. The manufacturers also sell the
instruments in the open market on which MRP is printed. The issue, therefore,
was how to value the telephone sets which were sold by the manufacturer in bulk
to the telephone deptt. The matter was referred to the Ministry of Law, who have
opined that valuation of telephone instruments supplied in bulk to telephone
deptt will be done as per sec.4 of the C.E. Act, 1944 and the instruments sold
in the market, with printed MRP, would be assessed u/s 4A of the Act. The
Ministry has accepted the opinion of the Law Ministry.

4.
The basic issue, therefore, is to determine the circumstances in which sec.4A of
the C.E. Act can be applied. The wording of Sec.4A(1) makes it very clear that
it will apply only to such goods "…… in relation to which it is
required, under the provisions of the Standards of Weights and Measures
Act,1976, or the rules made there under or under any other law for the time
being in force, to declare on the package thereof the retail sale price of such
goods….". In other words, if there is no statutory requirement under the
provisions of Weights and Measures Act to declare the retail sale price on the
packages, Sec.4A will not apply. As for example, in respect of bulk sale of
ice-cream to hotels/restaurants which are not meant for retail sales as such,
the provisions of the Weights and Measures Act will not apply. Chapter V of the
Weights & Measures (Packaged Commodity) Rules, 1977 mentions the instances
where MRP is not required to be printed on the packages. Thus, in these cases
valuation will have to be done under sec.4 of the C.E. Act, 1944.

5.
A somewhat similar issue was examined by the Board earlier vide letter F.No.341/64/97-TRU
dt.11.8.97 . This clarification was issued in the context of certain
assessees printing MRP on packages even where there was no statutory requirement
to do so under the Standards of Weights & Measures Act, 1976. It was
clarified that in such cases duty will be charged u/s.4 of C.E. Act, 1944 and
not u/s.4A (the clarification dt.11.8.97 did not, however, specifically mention
whether the disputed goods were notified u/s.4A or not and whether it covered
only non-notified goods).

6.
It is, therefore, clarified that, in respect of all goods (whether notified
u/s.4A or not) which are not statutorily required to print/declare the retail
sale price on the packages under the provisions of the Standards of Weight &
Measures Act, 1976, or the rules made there under or any other law for the time
being in force, valuation will be done u/s.4 of the C.E. Act, 1944( or under
section 3(2) of the Central Excise Act,1944, if tariff values have been fixed
for the commodity). Thus, there could be instances where the same notified
commodity would be partly assessed on the basis of MRP u/s.4A and partly on the
basis of normal price (prior to 1.7.2000) or transaction value (from 1.7.2000),
u/s.4 of the C.E. Act, 1944.

7.
The Standards of Weights & Measures Act, 1976, and the rules made there
under, are administered by the State Governments. Instances of dispute could
arise between the deptt. and the assessee as to whether, in respect of a
particular commodity/transaction, the assessee is exempted from declaring the
retail price or not. In case of such doubt a clarification may be obtained from
the concerned Deptt. (generally the Metrology Deptt.) of the State
Government.

8.
It may be kept in mind that if an assessee does not declare or print the retail
sale price in respect of a notified commodity, which it is statutorily required
to do under the provisions of the Weights & Measures Act, or any other law
for the time being in force, the goods, on removal, will be liable to
confiscation u/s. 4A(4) of the C.E. Act, 1944.

9.
Suitable Trade notices may be issued for the information of the Trade